Cvent Disappoints By Merely Meeting Q2 Estimates

Cvent's (CVT) first quarterly earnings report as a publicly traded company didn't prove to be a fun event for investors.

Shares of the maker of event-management software were down nearly 9% in after-hours Monday, after the company reported Q2 earnings and revenue that merely met Wall Street expectations. The company's guidance for the current quarter, however, did slightly exceed analyst estimates.

Cvent stock touched a new high in Monday's regular session, closing up 4.2% at 45.07. The stock started trading Aug. 9 at $21, ending its first day at 32.92, up 57%.

The company sells its software as a service via the Internet cloud. Its executives say their biggest competition by far comes from companies that do event-planning totally in-house. Cvent's software-as-a-service model seems to appeal to companies looking for easier ways to handle their events, says Tom Roderick, an analyst for Stifel Nicolaus & Co.

"They have done a fantastic job in defining the market and creating innovation within the market, and have created an automated touchpoint for event planners and hotel event managers to meet in the middle," Roderick told IBD. "The growth could be pretty substantial for a while."

For the quarter ended June 30, the McLean, Va.-based company said revenue rose 36% from the year-earlier quarter to $26.9 million. Sales rose 35% and 37% in 2011 and 2012, respectively.

For the current quarter, Cvent said it expects EPS ex items of break-even to a penny. That's vs. a 7-cent profit in the year-earlier quarter, according to Goldman Sachs.

Analysts were expecting a break-even quarter.

The company expects revenue of $27.5 million to $27.9 million, up 26% to 28%, where analysts were expecting $27.3 million, up 25%.

The company saw "increased demand from both new and existing customers of all sizes," Cvent CEO Reggie Aggarwal said on his earnings conference call with analysts.

"We believe we are in the early stage of transforming the $565 billion meetings industry ... and we are uniquely positioned as a cloud-based platform connecting both the demand side and the supply in the meetings' ecosystem," he said.

Cvent's (CVT) first quarterly earnings report as a publicly traded company didn't prove to be a fun event for investors.

Shares of the maker of event-management software were down nearly 9% in after-hours Monday, after the company reported Q2 earnings and revenue that merely met Wall Street expectations. The company's guidance for the current quarter, however, did slightly exceed analyst estimates.

Cvent stock touched a new high in Monday's regular session, closing up 4.2% at 45.07. The stock started trading Aug. 9 at $21, ending its first day at 32.92, up 57%.

The company sells its software as a service via the Internet cloud. Its executives say their biggest competition by far comes from companies that do event-planning totally in-house. Cvent's software-as-a-service model seems to appeal to companies looking for easier ways to handle their events, says Tom Roderick, an analyst for Stifel Nicolaus & Co.

"They have done a fantastic job in defining the market and creating innovation within the market, and have created an automated touchpoint for event planners and hotel event managers to meet in the middle," Roderick told IBD. "The growth could be pretty substantial for a while."

For the quarter ended June 30, the McLean, Va.-based company said revenue rose 36% from the year-earlier quarter to $26.9 million. Sales rose 35% and 37% in 2011 and 2012, respectively.

For the current quarter, Cvent said it expects EPS ex items of break-even to a penny. That's vs. a 7-cent profit in the year-earlier quarter, according to Goldman Sachs.

Analysts were expecting a break-even quarter.

The company expects revenue of $27.5 million to $27.9 million, up 26% to 28%, where analysts were expecting $27.3 million, up 25%.

The company saw "increased demand from both new and existing customers of all sizes," Cvent CEO Reggie Aggarwal said on his earnings conference call with analysts.

"We believe we are in the early stage of transforming the $565 billion meetings industry ... and we are uniquely positioned as a cloud-based platform connecting both the demand side and the supply in the meetings' ecosystem," he said.

The company is cracking the multibillion-dollar global meeting and event planning market, Greg Dunham, an analyst for Goldman Sachs, said in a research report released Sept. 3.

"Cvent's software-as-a-service platform is disrupting the $565 billion meetings and events industry for both buyers (i.e. corporations and associations) and suppliers (hotels and venues)," Dunham wrote. "The company has carved out a dominant vertical position, getting economics on both sides, and is solidifying its leadership with integrated solutions."

Cvent's revenue is divided between platform subscriptions, the core business for planning and managing events, and marketing solutions, which helps companies find hotels for their events. Q2 subscription revenue for its core software rose 35% to $18 million, with marketing solutions revenue up 39% to $8.1 million.

Cvent is developing mobile and social media applications and ticketing features. The company acquired online ticketing service TicketMob for at least $5.2 million, but that cost could rise as much as another $14.6 million if TicketMob reaches certain revenue and employee-retention goals.

Ticketing is a way Cvent is looking to expand revenue and better compete with rivals, including EventBrite and The Active Network (ACTV), says analyst Roderick.

"Ticketing, a feature that has accelerated quickly in the meeting planner segment, has been brought to the forefront, as rapidly growing private vendors such as EventBrite have shown a solid measure of success attacking the consumer event market through a product that is heavily ticketing-oriented," he wrote in a research note.

Global event-management software is a $5.6 billion market, according to a report from market tracker Frost & Sullivan commissioned by Cvent. But the non-software driven piece of the market is most compelling, says Cvent.

"The same study estimated that the global market for non-software and meeting management was $22 billion in 2012, which included the additional labor of planning, managing and executing events and meetings using manual processes that we believe our platform could address and make more efficient," the company said in a public filing.

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09/30/2013 11:07 AM ET

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